Recently Land O’Lakes, a giant dairy cooperative located in the upper Midwest, announced to many of their dairy farmers on the East coast that they were going to impose a supply management program on the co-op members to commence Jan. 1, 2016. Some of their reasons may or may not be justifiable.
However, the large concern of Land O’Lakes program is, they left out of their program the strong need for their members (and all dairy farmers) to receive a realistic price for their milk.
It would be more rewarding if Land O’Lakes and many other organizations would support a feasible supply management program (and these programs are available) that would address any problems created by a potential over-supply of milk. However, placing a dairy farmer in a milk supply program without a new pricing formula that would give a dairy farmer a fighting chance to cover their cost is completely unacceptable.
I firmly believe that a large number of dairy farmers would support a supply management program provision if a feasible milk pricing formula is contained in the program. Such a program would not tell a dairy farmer how much milk they can produce, but if it turns out they produce over their pre-determined base, then they would be penalized only on their over-production. The penalty funds then would be used to purchase dairy products that would be given to the needy in the United States.
However, the kicker in the program clearly would contain a new pricing formula based on the national average cost of producing milk on the dairy farms. Why not? Do dairy farmers realize that in the present pricing formula that establishes your pay price there is a real kicker for processors of dairy products?
It’s called a make allowance. It calls for the dairy farmer’s price they should receive to be lowered by somewhere around $1.50 per cwt., because of the make allowance processors receive from the formula. Please remember the processors have much to say regarding the value of the dairy products on the market. So, in other words, the processors have a chance to cover their cost (as they should) when their products are marketed-plus they gain with the make allowance in the pricing formula! Hmmm?
What about you dairy farmers? Oh yes! Dairy farmers have really been rewarded:
- April 1, 1981. The support price was frozen preventing any upward adjustment
- You were given the unfeasible diversion program
- Don’t forget the dairy termination act
- The Gramm-Rudman Act
- Don’t forget that Congress different times lowered the milk support price from $13.60 down to $9.90 per cwt.
- The MILC program being eliminated
- Don’t forget that milk support price program has been eliminated
- But remember your reward was when Congress gave you the present Margin Insurance Program. In our opinion the Insurance program is one of the worst pieces of legislation ever passed for dairy farmers.
- And never forget some organization brought the former House speaker John Boehner into southern Pennsylvania and rewarded him for preventing any milk supply management program in the recent Farm Bill. Your reward was a 30-35 percent reduction in the dairy farmers’ pay price.
- It appears to me that all dairy farmers should support a new program for dairy farmers that is feasible to everyone!
Pro-Ag can be reached at 570-833-5776.
Arden Tewksbury, Pro-Ag